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Global Market Report - 9 January

Lex Hall  |  09 Jan 2019Text size  Decrease  Increase  |  
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Australia

Australian shares are set to climb again as global markets rally on trade talks between China and the US, which have entered a third day.

The SPI200 futures contract was up 20 points, or 0.35 per cent, to 5683.0 at 8am Sydney time on Wednesday, hinting the benchmark ASX/200 will extend gains into a second session.

Yesterday, the ASX posted another day of gains as traders wondered if the four-month downtrend is finally over. The benchmark S&P/ASX200 index closed up 38.8 points, or 0.70 per cent, to 5783, with technology, health care and the financial sector lifting the bourse.

The Aussie dollar is also higher, buying 71.39 US cents from 71.29 US cents on Tuesday.
Global markets are buoyant on hopes the US and China will strike a deal to end a trade war that has rocked financial markets for months.

On Wall Street, Apple and Amazon helped the S&P 500 to a three-week high, lifting the index 0.97 per cent to 2574.1.

The Dow Jones Industrial Average jumped 1.09 per cent to end at 23,787.45 points, while the Nasdaq Composite added 1.08 per cent to 6897.00.

Oil is also higher on trade optimism but industrial metals are muted.

Gold has edged lower as investors' appetite for risk grows.

In the UK, British Prime Minister Theresa May's government has suffered a defeat in parliament when MPs who oppose leaving the European Union without an accord won a vote on creating a new obstacle to a no-deal Brexit.

The 303 to 296 defeat means that the government needs explicit parliamentary approval to leave the EU without a deal before it can use certain powers relating to taxation law.

In local finance news on Wednesday, the Australian Bureau of Statistics is scheduled to release data on building approvals and job vacancies for November.

ASIA

Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.82 per cent and the Hang Seng rose 0.15 per cent. The Shanghai Composite lost 0.26 per cent.

In Hong Kong, property stocks were among the gainers: CK Assets rose 3.3 per cent to $62.5, CK Hutchison Holdings rose 2 per cent to $77.35, and Sun Hung Properties gained 1.1 per cent to $119.5.

EUROPE

European markets finished broadly higher with shares in France leading the region. The CAC 40 is up 1.15 per cent while London's FTSE 100 is up 0.74 per cent.

Germany's DAX is up 0.52 per cent despite poor industrial data. German industrial output unexpectedly fell 1.9 per cent in November in a broad-based decline led by consumer goods and energy.

Year-on-year output was down 4.7 per cent, the worst performance since 2009. The downturn raises the risk that Europe’s largest economy will slip into recession.

The Stoxx Europe 600 defied the German production data, with gains among retailers and real estate companies.

NORTH AMERICA

The S&P 500 has jumped to a three-week high, led by Apple, Amazon, Facebook and industrial shares on bets that the US and China would strike a deal to end their trade war.

The three-day rally that kicked off on Friday following robust US jobs data and dovish comments on interest rates by Federal Reserve chief Jerome Powell has lifted the S&P 500 by more than 9 per cent from 20-month lows touched around Christmas.

The S&P 500 has gained in seven of the past nine sessions.

The US and China will extend trade talks in Beijing for an unscheduled third day, a member of the US delegation said, as the world's two largest economies looked to resolve their bitter trade dispute. So far, officials from both sides have sounded optimistic, with US President Donald Trump saying talks were going well.

The trade-sensitive S&P industrials sector rose 1.4 per cent. Boeing shares jumped 3.8 per cent, contributing the most to the Dow's rise, after the company said it had delivered a record 806 aircraft in 2018.

Apple rose 1.9 per cent, regaining some ground after the company last week warned of weaker-than-expected demand for its iPhones. But tech sector gains were limited by a drop in chip stocks after Samsung blamed an estimated 29 per cent drop in quarterly profit on weak chip demand.

The Philadelphia Semiconductor index slid 0.49 per cent. Adding to the woes, Goldman Sachs forecast a tough year for chipmakers, particularly in the first half.

The communication services index climbed 1.6 per cent, with Facebook adding 3.25 per cent after JPMorgan said the social media company was among its favourite internet picks for 2019.

Amazon.com rose 1.66 per cent, increasing its market capitalisation to $US810 billion and cementing its position as the most valuable US company.

The Dow Jones Industrial Average jumped 1.09 per cent to end at 23,787.45 points, while the S&P 500 gained 0.97 per cent to 2574.41. The Nasdaq Composite added 1.08 per cent to 6897.00.

Financials were the only S&P index not to gain, ending unchanged as the US Treasury yield curve flattened.

PG&E Corp shares continued to decline, falling 7.34 per cent after S&P Global Ratings stripped the California power utility of its investment-grade credit rating.

is content editor for Morningstar Australia

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